Out of Control Policy Blog

Michigan Privatizes Ski Resort

From the Mackinac Center:
The Mackinac Center for Public Policy today praised Michigan's Department of Natural Resources (DNR) for contracting out management of the Porcupine Mountains Downhill Ski Area, also known as "the Porkies." The Mackinac Center has been recommending full privatization for the state-owned ski area since 2001.

"State officials have taken the pork out of the Porkies," said Michael LaFaive, director of fiscal policy for the Mackinac Center. According to LaFaive, "All indications are that state officials executed a textbook outsourcing play. They made their intentions known publicly, solicited vendor interest, fielded testimony from concerned parties, and negotiated a well-written agreement. All of these are key components of successful privatizations."

The deal means state taxpayers won't be on the hook for losses derived from operation of the state-owned ski hill, as they have been since the 1950s. In 2001 and 2002 the Porkies lost more than $173,000 and $57,000, respectively. Any losses during the 2004 ski year will be the responsibility of Porcupine Mountain, L.L.C., the resort's new private, for-profit vendor.

"Running a ski resort can hardly be classified as a legitimate government function," said LaFaive. "Next, the DNR should look into selling the Porkies to the highest bidder."

Just weeks into the new concession contract, Porcupine Mountain, L.L.C. has increased marketing of the Porkies and held a one-day season pass sale, in which passes were offered for $99, a 60 percent drop in price. The change led to an approximate 12-fold increase in the number of season passes sold. In addition, the daily rate charged to skiers remained unchanged from last year's, at $28.

The privately managed Porcupine Mountains Downhill Ski Area is scheduled to open Dec. 19.


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